Did Scandal End Lott's Career?

Lott's sudden resignation coincides with an FBI raid on his brother-in-law's office. Maybe that's a coincidence, and maybe it isn't.

Obituaries for the political career of former Senate Republican leader (and current Republican whip) Trent Lott, who announced Nov. 26 that he will retire in December—a full five years before his term runs out—have entertained various theories as to why Lott is quitting his job. There's the No Fun theory, which posits that Lott, along with the 17 Republican House members and five Republican senators also choosing to retire, have simply lost their enthusiasm for promoting the policies of an unpopular president in a Congress where they lack a majority. There's the Greedy Pig theory, which posits that Lott wants to dodge new lobbying restrictions that take effect Jan. 1. And there's the Still Clueless About Thurmond theory, which posits that Lott remains puzzled and bitter about losing the top leadership spot simply because, at a 2002 celebration of Thurmond's 100th birthday, he said something nice about Thurmond's 1948 campaign for president on the segregationist Dixiecrat ticket. (Full disclosure: In his 2005 book Herding Cats, Lott accuses me of lighting the bonfire. That isn't true, but I'll own up to tossing the first log.)

Please welcome now the Scandal theory, which is suddenly gaining traction with conservative blogger Michelle Malkin; with Harper's blogger Scott Horton; with Atlantic blogger Andrew Sullivan; and most especially with David Rossmiller, managing editor of the Insurance Coverage Law blog, which is maintained by Dunn Carney Allen Higgins and Tongue, a law firm based in Portland, Ore. The Scandal theory, which is admittedly speculative, is that legal proceedings concerning Mississippi Attorney General Jim Hood and the flamboyant plaintiff's attorney Richard "Dickie" Scruggs, who is also Lott's brother-in-law, are about to expose improper behavior by Lott.

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Our story begins in August 2005, when Hurricane Katrina wreaked its vengeance on the Gulf Coast. In addition to depopulating New Orleans, this unwelcome weather event had the temerity to knock down Lott's 154-year-old beachfront home in Pascagoula, Miss., and also the home of Dickie Scruggs, who in addition to being Lott's brother-in-law was also Lott's neighbor. Lott filed a claim with his insurer, State Farm, but State Farm denied the claim, arguing that the culprit was not high winds, which the policy covered, but rather flooding, which the policy didn't cover. (Lott had separately purchased federal flood insurance, but that didn't come close to covering his losses.) Scruggs filed suit (subscription required) on Lott's behalf.

Scruggs also created a Scruggs Katrina Group to pursue similar lawsuits and very likely encouraged his friend Hood to do the same. (Scruggs has given heavily to Hood's state election campaigns; just this past July, for instance, he wrote a check for $33,000.) The extent to which Hood and Scruggs have been collaborating is unclear, but an FAQ on the Scruggs Katrina Group's Web site acknowledges (here and here) that the two have shared information.

Lott, meanwhile, declared war not only on State Farm ("Like many of you, I wondered how State Farm Insurance this week could report a surging $5.6 billion profit—up 65 percent from $3.2 billion in 2005—when our state's largest insurer has been inundated with an unprecedented volume of storm claims") but on the entire insurance industry. He introduced legislation requiring homeowner insurers to clarify what their policies cover and what they don't; he co-sponsored legislation to eliminate the antitrust exemption for insurance companies; he brought Hood up to Washington to testify before the Senate commerce committee, of which he is a member; and he entered internal State Farm e-mails concerning Katrina coverage into the Senate hearing record. According to Chuck Chamness, CEO of the National Association of Mutual Insurance Companies, Lott phoned him last year and threatened "bringing down State Farm and the industry." It was, complainedWall Street Journal editorialist Kimberley Strassel, "a ferocious campaign of political revenge that would make even Henry Waxman envious." Strassel even called it "extortion," noting that State Farm had quickly settled with Hood and Scruggs, and paid off Lott. (The settlement has since come unglued.)

Strassel probably didn't mean to be taken literally, but the question lingers: Did Lott's uncharacteristically liberal Senate crusade, or any support he gave Scruggs or Hood, include actions that were potentially illegal?

We don't know. But we do know that earlier this month, State Farm sued Hood, alleging that he opened a criminal investigation of the insurer in order to force the civil settlement. State Farm persuaded the judge to unseal the case, raising the possibility that embarrassing documents involving Hood (and possibly Scruggs or Lott?) will be made public.

We also know that on Nov. 27—one day after Lott's announcement that he would retire—the Federal Bureau of Investigation searched Scruggs' law office. Scruggs' attorney, Joey Langston, said the FBI was looking for a document "ancillary" to the Katrina litigation. Despite eight hours of searching, the G-men didn't find it, according to Langston, but they left with copies of computer hard drives.

There may be absolutely nothing corrupt, much less illegal, about the actions taken by Hood, Scruggs, and Lott. Most of the allegations made against them have come from tort-reform conservatives like Strassel and James Q. Wilson, who are predisposed to think the worst of pro-consumer lawsuits against and increased regulation of private industry. But Lott's personal financial stake in his legislative jihad against State Farm, and the thuggish language that Chamness attributes to him, do seem unprofessional at best. Maybe the story ends there. Maybe it doesn't. If it doesn't, we'll probably know a lot more soon.

Update, Nov. 29: Dickie Scruggs and several associates, including his son Zach, were indicted yesterday on charges of conspiring to bribe a Mississippi judge with $40,000 to rule in their favor in a fee dispute related to the Katrina litigation. Click here for a copy of the indictment. It quotes Timothy R. Balducci, another lawyer indicted in the case, saying the following:

Well, uh, like I say, it ain't but three people in the world that know anything about this ... and two of them are sitting here and the other one ... the other one, uh, being Scruggs ... he and I, um, how shall I say, for over the last five or six years there, there are bodies buried that, that you know, that he and I know where ... where are, and, and, my, my trust in his, mine in him and his in mine, in me, I am sure are the same.

A Lott connection isn't obvious, since this alleged scheme involves only lawyers. But whose "bodies" was Balducci talking about?